We estimate that the net proceeds to us from our issuance and sale of shares of
common stock in this offering will be approximately $234.4 million (or
approximately $270.6 million if the underwriters exercise their option to
purchase additional shares of common stock in full), after deducting estimated
underwriting discounts and commissions and offering expenses payable by us.
We intend to use the net proceeds we receive from this offering as follows:
. $56.3 million to close the acquisition of 100% of the ownership interests in
the ID&T Business, including the acquisition of the remaining interests in
the ID&T JV;
. $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million,
based on the exchange rate on the day prior to closing) to close the
acquisition of 100% of the ownership interests in i-Motion;
. AUD$65.0 million (or $61.1 million) to close the acquisition of substantially
all of the assets of Totem;
. $16.3 million to close the acquisition of 70% of the ownership interests in
Made; and
. the balance, if any, to fund working capital, capital expenditures and other
general corporate purposes, which may include other acquisitions of
complementary businesses designed to increase our geographic footprint and
our pool of executive level talent.
This expected use of net proceeds of this offering represents our intentions
based upon our current plans and business conditions. Our management will
retain broad discretion over the allocation of any net proceeds used for
capital expenditures or other general corporate purposes.
Pending use of the proceeds from this offering, we intend to invest the net
proceeds in a variety of capital preservation investments, including short-term,
investment-grade and interest-bearing instruments.

The broader market for live entertainment is highly competitive. We believe
that we compete primarily on the basis of our EMC focus and the unique creative
elements, combined with high production value of our events, festivals and
managed venues. In the markets in which we promote festivals and events, we
face competition from promoters and venue operators. We believe that barriers
to entry in the promotion services business are low and that certain local
promoters are increasingly expanding the geographic scope of their operations.
Our main competitors in the live music industry include Live Nation, AEG,
Warehouse Live, Insomniac, Kaos Entertainment, C3 Concerts, Real Music Events,
Slow Motion Music, SDC, Gritsy and Reverse, in addition to numerous smaller,
regional companies that operate in our markets. Our competitors compete with us
in all regions and cities for tickets sales, artist bookings, EMC fans and
concert attendees, venues, sponsorships and production equipment. Some of our
competitors whose preliminary business is outside of EMC are larger companies
with significant operations and a higher profile in the industry. However, we
have expertise in the live music industry and the electronic dance music genre,
in particular, and we work with the leading EMC promoters in the world, which
helps us to be competitive in this industry.
In our music business, we distinguish ourselves from competition through the
breadth and professional nature of our electronic-focused offering. We believe
that our primary strengths include:
. the quality of service we deliver to all constituencies within the EMC
community including fans, artists and DJs;
. our track record in promoting and producing large EMC events in our markets;
. our strong relationships with artists, DJs, booking agents, promoters, venue
operators and ticketing agents;
. the span and influence of our fan community;
. our premier managed EMC venues; and
. the availability of high quality MP3 and uncompressed music tracks which we
supply to DJs to produce and perform music.
With respect to our Beatport business, we face competition from providers of
interactive on-demand audio and video content, and pre-recorded entertainment,
such as Apple's iTunes Music Store, RDIO, Rhapsody, Spotify, Pandora, Amazon
and other digital content providers that allow online listeners to select the
audio content that they stream or purchase. However, we believe the breadth and
professional nature of our electronic music-focused offering is unique. Our
primary source of music sales revenue is derived from high quality audio files
which DJs require for production and performance. Beatport is the premier
destination for such professional quality offerings.

Company Description

We believe we are the largest producer of live events and entertainment content
focused exclusively on the electronic music culture ("EMC"), based on attendance
and revenue. We view EMC as a global generational movement driven by a rapidly
developing community of avid followers among the millennial

generation. Our
mission is to enable this movement by providing our fans with the best possible
live experiences, music discovery and connectivity with other fans and events.
We have significant and growing scale with our global live events. On a pro
forma basis for our completed acquisitions, we attracted 1.3 million fans
in 2012 (a 36.0% increase from 2011), and on a pro forma basis for our completed
and planned acquisitions, we attracted 2.8 million fans in 2012 (a 22.2%
increase from 2011). We believe the broad appeal of EMC beyond festival
attendance is demonstrated by the deep engagement of our fans, which is
evidenced by the time they devote to EMC-related social media and digital
activities. For example, the 2012 Tomorrowland festival in Belgium had
7.9 million live views on YouTube and the official Tomorrowland long-form after
movies have had over 157 million online views to date.
We present leading EMC festivals and events, many of which have more than a
decade of history, passionate followers and vibrant social communities. We have
presented Life in Color events and two Sensation festivals and have acquired the
rights to the Tomorrowland, Mysteryland and Q-Dance festivals in North America.
Through planned acquisitions, we expect to acquire the rights to those festivals
worldwide, as well as the rights to Stereosonic, Electric Zoo, Decibel, Nature
One, MayDay and Ruhr-in-Love, among others.
We are continually investing in our festivals and events to add new and exciting
creative elements, expand into new markets, and launch new events, all in order
to provide the best entertainment experiences in the world for EMC fans. Many of
the festivals we have presented or expect to present have a long history and
have achieved substantial popularity and success in Europe while also attracting
fans globally. For example, Tomorrowland sold out all of its approximately
180,000 tickets to the 2013 festival in Belgium in one second and saw
significant demand from U.S.-based fans, each seeking to purchase multiple
tickets. To meet the growing demand of the EMC community in the United States
and other regions around the world, we plan to introduce some of the most
popular festivals and events to certain areas for the first time. At its
original location in Amsterdam, Sensation has consistently sold out since its
inception in 2000, including all 37,000 tickets for 2013. Our ID&T JV has held
two Sensation festivals in North America in 2013, its inaugural festival in
Toronto, which attracted over 24,000 attendees, and a second festival in
Oakland. We have announced three additional Sensation events in North America
for 2013, which will be held in Las Vegas, Miami and New York. Our ID&T JV had
more than 120,000 attendees at the first North American Tomorrowland festival,
TomorrowWorld, which we held outside of Atlanta from September 27 through
September 29, 2013.
We are also addressing the demand from the growing EMC community for music,
engaging content and social connectivity between and around live events. A key
component of this initiative is Beatport, which is the principal source of music
for EMC DJs and a trusted destination for the growing EMC community. Beatport is
a vital channel for over 200,000 registered DJs and artists to launch music and
connect with fans. In addition, Beatport has a rapidly growing fan community,
with approximately 40 million unique visitors in 2012 (according to Google
Analytics), who primarily use the site to discover and stream music, follow DJs
and keep abreast of EMC news, information and events.
The global market directly associated with electronic dance music is projected
to be approximately $4.5 billion in 2013, according to the International Music
Summit Business Report. Electronic music has a history of over 20 years of
mainstream popularity in Europe and has more recently evolved into a widely
followed genre of music in the United States and other international markets.
For example, total attendance at what are currently the five largest U.S. EMC
festivals grew 41% annually from 2007 to 2012 (although there is no guarantee
that this growth rate will continue in the future). This compares to 2% annual
revenue growth for the overall North American concert market during the same
period, according to Pollstar, a concert industry trade publication. Further
reflecting this trend, in 2012 the National Academy of Recording Arts and
Sciences added a Dance/Electronic category for the Grammy Awards, Billboard
launched a Dance/Electronic chart, and in February 2013, a Dance/Electronic song
reached #1 on the Billboard Hot 100 chart for the first time. EMC festivals and
events typically feature many different artists and DJs, as well as elaborate
sets, lighting and special effects centered on different creative themes. These
festivals and events have become highly experiential and social happenings that
are enjoyed by thousands of fans. These experiences, further propelled via
social media and shared by millions of fans globally, are at the heart of the
generational movement that is EMC.
Our market is characterized by a high degree of ownership fragmentation, and we
believe it is well positioned for consolidation. We have a disciplined
acquisition strategy that utilizes our in-house expertise and experience to
identify, evaluate and integrate acquisitions. We plan to implement best
practices across acquired companies and provide active business development,
managerial support and financial discipline to achieve operational efficiencies.
This will allow us to bring our fans more and higher quality EMC experiences
while preserving the unique identities of these events. We have acquired and
formed, or plan to acquire simultaneously with or shortly after consummation of
this offering, the following businesses in pursuit of this strategy.
2012 2012 Total
Events/ Attendance
Asset/Status Ownership Festivals (000s) Description
BEATPORT, LLC 100 % NA NA Principal online
"Beatport" resource and
destination for EMC DJs
Completed and enthusiasts,
offering music for
purchase in multiple
downloadable formats
(including
uncompressed, high
quality audio files)
and providing unique
music discovery tools
for DJs and fans.
Disco Donnie Presents 100 % 600 / 8 867 Promoter of EMC events
"DDP" in North America since
2000, including
Completed ownership interests in
large EMC festivals.
ID&T 100 % 39 / 29 961 One of the largest
content providers and
Planned(a) producers of
international EMC live
events across 19
countries and four
continents.
ID&T-branded festivals
include Tomorrowland,
Mysteryland, Sensation,
Q-Dance, B2S, Decibel
and Defqon.1. At the
same time as this
acquisition, we will
increase our interest
in our North American
joint venture with ID&T
from 51% to 100%, with
an economic effect as
of July 1, 2013.
i-Motion GmbH Events & 100 % 7 / 5 208 Leading promoter and
Communication producer of EMC
"i-Motion" festivals and events in
Germany, with key
Planned(b) brands including Nature
One, Germany's largest
open-air EMC festival.
Life in Color 100 % 138 / 4 437 Promoter and organizer
"LIC" of branded events that
feature live music by
Completed DJs, acrobatic acts and
"paint blasts."
Made Event, LLC and 70 % 14 / 1 130 Promoter and producer
EZ Festivals, LLC of EMC festivals and
collectively, "Made" events in the United
States, including
Planned(c) Electric Zoo, held
annually in New York
City.
MMG Nightlife LLC 80 % NA NA Management company that
"MMG" manages some of the
most popular EMC venues
Completed in South Beach,
Florida.
Totem Onelove Group 100 % 15 / 5 247 Promoter and producer
Pty Ltd and Totem of leading Australian
Industries Pty Ltd EMC festival,
collectively, "Totem" Stereosonic, a five
city touring outdoor
Planned(d) festival held annually
in summer
(November/December) in
conjunction with a
touring and promotion
business.
(a) If our acquisition of the worldwide business (the "ID&T Business") of ID&T
does not close by October 31, 2013 (which may be extended to November 15,
2013 under certain circumstances), One of Us Holding B.V., the seller of
the ID&T Business (the "ID&T Seller"), will be entitled to terminate the
stock purchase agreement and retain all acquisition consideration paid to
date by us to the ID&T Seller.
(b) If we do not complete this offering by October 16, 2013, then each party to
the i-Motion share purchase agreement will be entitled to rescind the
agreement by giving written notice to the other party.
(c) If this acquisition does not close by October 31, 2013, the principals of
Made are entitled to retain our advance of $3.75 million. If we fail to
close this acquisition by the applicable deadline, we may be required to
renegotiate the terms of the acquisition in their entirety.
(d) If this acquisition does not close by October 31, 2013, for any reason
other than a breach of the asset contribution agreement by Totem, Totem
will be entitled to retain our deposit of AUD$5.0 million (or $4.8 million
as of May 22, 2013).
We have agreed to the following terms in respect of the four planned
acquisitions described above. We intend to use the proceeds of this offering to
fund the cash portion of the consideration for these acquisitions and consummate
them simultaneously with or shortly after the closing of this offering.
. Under a stock purchase agreement with the ID&T Seller, we have agreed to
acquire 100% of the equity interests of ID&T (the "ID&T Acquisition"). On
March 20, 2013, we paid $2.5 million in cash and issued 2,000,000 shares of
our common stock as consideration for an option to purchase a 75% ownership
interest in the ID&T Business (the "ID&T Option"). On August 8, 2013, in
connection with our exercise of the ID&T Option, we paid an advance of
$10.0 million to the ID&T Seller and caused a $7.5 million non-recourse
loan that ID&T/SFX North America LLC (the "ID&T JV") made to ID&T to be
transferred to the ID&T Seller, effectively cancelling the repayment
obligation for that loan. On September 23, 2013, we signed an agreement to
purchase the remaining 25% interest in the ID&T Business not covered by the
ID&T Option. Upon closing the ID&T Acquisition, we will pay additional cash
consideration of $50.4 million and issue to the ID&T Seller $10.4 million
of our common stock at the price to the public in this offering and a
$10.4 million promissory note that matures in June 2014 and bears an
interest rate of 3.0%. At closing, we will also make a cash payment to
settle certain working capital adjustments that we preliminarily estimate
to be $5.9 million. The final working capital adjustment will be based on
final analysis subsequent to the close of the ID&T Acquisition. Following
the closing of the ID&T Acquisition, our ownership interest in the ID&T JV
will increase from 51% to 100%, with an economic effect as of July 1, 2013.
. Under a share purchase agreement with i-Motion, our acquisition of the 100%
ownership interest of i-Motion will cost (i) $16.0 million (or, if greater,
the U.S. dollar equivalent of €12.6 million, based on the exchange rate on
the day prior to closing) in cash and (ii) $5.0 million (or, if greater,
the U.S. dollar equivalent of €3.9 million, based on the exchange rate on
the day prior to closing) in shares of our common stock at the price to the
public in this offering.
. We have entered into an asset contribution agreement with Totem, under
which we have agreed to pay AUD$90.0 million, consisting of
AUD$75.0 million (or $70.4 million) in cash and AUD$15.0 million (or
$14.1 million) in shares of our common stock at the price to the public in
this offering to acquire 100% of Totem. The cash payment is divided into
three parts, a deposit of AUD$5.0 million (or $4.8 million as of May 22,
2013) that we funded on May 22, 2013, AUD$65.0 million (or $61.1 million)
to be paid at closing and AUD$5.0 million (or $4.7 million) to be paid by
February 28, 2014.
. We have entered into a membership interest purchase agreement with Made,
under which we have agreed to pay $35.0 million, consisting of
$20.0 million in cash, $5.0 million in our common stock at the lower of
$12.75 per share or the price to the public in this offering and
$10.0 million in promissory notes for a 70% ownership interest in Made. On
June 24, 2013, we advanced $2.5 million towards the purchase price for this
transaction, and on August 21, 2013, we advanced an additional $1.25 million
towards the purchase price. We will be required to purchase in 2018 the
remaining 30% that is not being sold.
Although, we consider each of these acquisitions to be a "probable acquisition"
for the purposes of Rule 3-05 of Regulation S-X, in each case, there are
substantial potential impediments that could cause us to fail to close a given
acquisition or otherwise prevent it from being successful.
---
SFX was incorporated in the State of Delaware on June 5, 2012. Between June 5,
2012 and February 13, 2013, SFX was named SFX Holding Corporation. We started
our business on July 7, 2011 as SFX EDM Holdings Corporation, which is now a
wholly-owned subsidiary of SFX Entertainment, Inc.
Our principal executive offices are located at 430 Park Avenue, 6th Floor, New
York, New York 10022, our telephone number is (646) 561-6400 and our Internet
address is www.sfxii.com.

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